Impact of Macro Environment on Business Operations

Business and business
Environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1. Explaining about different types of organisation, their advantage and disadvantage and
comparing them...........................................................................................................................3
TASK 2............................................................................................................................................5
2. Two types of organisational structure and interrelationship between organisational functions
and show their relation with organisational objectives................................................................5
TASK 3............................................................................................................................................8
3. Analyse both positive and negative influence/impact of Macro environment on business
operations.....................................................................................................................................8
TASK 4..........................................................................................................................................11
SWOT Analysis of organization and its interrelationship with external macro factors............11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Business environment plays an important role in assessing that whether an organization will
be able to derive adequate amount of profits from its activities or not. The report makes
comprehensive discussion regarding different types of organisation, their advantage and
disadvantage and establishing comparison among them. The report will also prepare an
assessment of types of organisational structure and interrelationship between organisational
functions so that its impact can be ascertained. It, the, focuses on, performing Pestle and SWOT
Analysis so as to assess the performance of the business and its impact on business functions. In
the end, its interrelationship with external macro factors will also be ascertained in the report.
TASK 1
1. Explaining about different types of organisation, their advantage and disadvantage and
comparing them.
To establish a business entity, there are different options available like sole trader,
partnership, private, public and voluntary. This depends upon the size, circumstances, objectives
and scope.
Sole Trader
This form of business is operated by only one person. It is one of the simplest forms of
business. The requirements are minimal and easy to set-up as it is the least costly. The owner of
business can choose either its own name or can use “d/b/a” which means doing business as. But
major drawback of sole trader i.e. owner faces unlimited liability. In case of repayment of debts
owner's personal assets are been used. Even though sole proprietorship is among top choices for
small business as they are economical and cheaper start-up. Sole trader is less subjected to
government involvement and taxation like other forms of businesses (Aithal, 2016). But under
the law owner and business are treated as same and there is no distinction between them. The
scope of business is small and objective of sole trader is to earn profit for their family members.
Partnership
The formation of this form of business takes place when two or more individuals form a
written agreement. It can be established in between one forms of business with another form.
Partners divide their profits of share and their liabilities into agreed ratio in between them. It is of
two types; in general partnership liabilities of partners are unlimited while in limited partnerships
creditors cannot claim the personal assets of partners. In UK, partners are not considered as an
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independent legal entity and payment of tax is done similar as that of limited partnership. The
merit of partnership firm is that there is limited external regulations. It increases the borrowing
capacity of firm and thus, more capital is available. Further, it is easy to establish as start-up cost
is low. But, demerit of partnership firm is that there is a risk of disagreements and conflicts may
arise in between them (Babatunde and Adebisi, 2012). If partners join or leave the firm, assets of
organisation is revalued which is costly. Lastly, each partner is an agent of other. Thus, he/she is
liable for actions by others.
Private
It refers to that form of company which held privately by small business entities. The
liability of members is being restricted to the amount of shares held by them. The members of
private limited companies are not allowed to publicly trade their shares. The formation of
company starts with its registration till it get professional certificate of incorporation. The merit
of forming a privately ow ned company is that they have less legal formalities in comparison to
public companies (Beske and Seuring, 2014). They are not subjected to compulsion of disclosing
their information to other parties. Less number of shareholders provide advantage of quick
decision and fewer complications within organisation. Moreover, they are being benefited in
treatment of tax. The demerit of forming of private companies are; It cannot be operated by any
sole entrepreneur. The procedure of winding up of company is complicated, costly and time
consuming (Brewster, 2017).
Public
It is the legal name used within the UK and some Commonwealth cities for Limited Liability
Company. These PLC's can be owned by various entities like individuals, trust, other LLC's and
corporations. These are in hybrid forms of business which means that it has characteristics of
both corporations and partnerships. The owner of these companies enjoyed limited liability and
taxation is done according to partnership firms. To ensure partnership form of taxation, it is
required to provide legal documents. The formation of PLC's start with two or more people
forming a company and its filing the Articles of Association. The stock of limited companies can
be acquired by anyone through an initial public opening or through trades or stock (Cascio,
2018). The scope of PLC's is big and it include all those companies who are listed on London
Stock Exchange (LSE). Example; the British Oil Company i.e. known as BP PLC's. The major
advantage of forming a PLC's is the ability to raise required amount of capital through public
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